Grantmaking Foundations

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 11,800 grantmaking foundations in the US award grants from trust funds to support charitable activities. Top areas of focus for giving include healthcare, education, human services, public affairs, arts and culture, environmental causes and animals, and international affairs.

Market Risk Challenges Investments

Fluctuations in interest rates, corporate earnings, and global financial markets can create a challenging investment environment for foundations.

Facing Public Scrutiny

Grantmaking foundations, particularly public foundations, face scrutiny from the public to provide transparency.

Industry size & Structure

The average grantmaking foundation operates out of a single location, employs about nine workers, and generates $17.8 million annually.

    • According to the US government, the grantmaking foundation industry consists of about 11,800 firms that employ 105,700 workers and generates $210 billion in revenue.
    • The 238 US foundations surveyed in 2019 received over $9.4 billion in gifts, distributed nearly $8.4 billion to organizations and individuals, and managed over $94.1 billion in assets, according to Candid and the Columbus Survey.
    • The top 50 organizations account for about 38% of industry revenue.
    • Large organizations include the Bill and Melinda Gates Foundation, the Ford Foundation, and the Silicon Valley Community Foundation (SVCF).
    • Most foundations have less than $50 million in assets.
                                  Industry Forecast
                                  Grantmaking Foundations Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Mar 2, 2024 - Strong Revenue Growth Expected
                                  • Grantmaking foundation industry sales are forecast to grow at a 6.19% compounded annual rate from 2022 to 2027, faster than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc. Foundations generate revenue from endowment returns and donations. Industry labor costs increased during the first 11 months of 2023 as employment increased slightly while average wages for nonsupervisory employees increased significantly.
                                  • Few philanthropic foundations invest their endowment assets to create positive social and environmental change in addition to high returns, according to Bridgespan Social Impact. About 5% of the primarily US-based foundations surveyed invest their assets for impact. One of the biggest concerns is financial performance. Some foundation leaders worry that impact investments lead to so-called concessionary returns, where a market rate of return is sacrificed to achieve a social or environmental benefit. Foundations are required by the US Internal Revenue Service to grant 5% of their assets each year to charity; in practice they have granted slightly more in the last 10 years — an average of 7% of their assets, according to Delaware-based FoundationMark. The remaining assets of these foundations are invested with the intention of earning the “highest-possible risk-adjusted financial returns.” Those investments allow these organizations to grant funds often in perpetuity.
                                  • Forecasters expect the economy to grow 1.3% in 2024, down from a projected 2.4% in 2023 but above their 0.7% estimate in July, according to a December 2023 survey by Wolters Kluwer Blue Chip Economic Indicators. Slower GDP growth may negatively impact donor capability to give. Meager gains in the first half of 2024 should give way to stronger output by fall as the Federal Reserve is expected to cut interest rates further, forecasters say. GDP growth of just under 2% is far from robust but it would be close to the 2% average in the decade before the pandemic. The early-January 2024 unemployment rate, modestly above a 50-year low, is projected to increase to 4.2% by the end of 2024, well below economists’ 4.8% estimate a year earlier.
                                  • Four of the top five US environmental grantmakers are Americans who rank among the 30 wealthiest people in the world, according to Forbes. About two-thirds of the listed grantmaking operations are funded by billionaires. Several of the institutions on Forbes' list did not exist a few years ago: Bezos Earth Fund, Yield Giving, and Sequoia Climate Foundation. The climate fund of Amazon founder and former world’s richest man Jeff Bezos was the largest environmental funder in the US during 2021. Others, like the Chan Zuckerberg Initiative, made their first climate grants in 2021.
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